Archive for August, 2009

The film MONEY-DRIVEN MEDICINE reveals how a profit-hungry medical-industrial complex has turned health care into a system that squanders millions of dollars on unnecessary tests, unproven and sometimes unwanted procedures and overpriced prescription drugs. Oscar-winning filmmaker Alex Gibney has teamed up with producers Peter Bull, Chris Matonti, and director Andy Fredericks to produce a film based on Maggie Mahar’s powerful book MONEY-DRIVEN MEDICINE.

After covering the health care industry for years as a financial journalist, Mahar wanted to write a book examining the system from the perspective of doctors and patients. The response from the doctors she contacted was overwhelming — five out of six called her back. The film brings their stories to the screen, portraying an industry where corporate profits often get in the way of care.

NEW YORK (Fortune) — In promoting his health-care agenda, President Obama has repeatedly reassured Americans that they can keep their existing health plans — and that the benefits and access they prize will be enhanced through reform.

A close reading of the two main bills, one backed by Democrats in the House and the other issued by Sen. Edward Kennedy’s Health committee, contradict the President’s assurances. To be sure, it isn’t easy to comb through their 2,000 pages of tortured legal language. But page by page, the bills reveal a web of restrictions, fines, and mandates that would radically change your health-care coverage.

If you prize choosing your own cardiologist or urologist under your company’s Preferred Provider Organization plan (PPO), if your employer rewards your non-smoking, healthy lifestyle with reduced premiums, if you love the bargain Health Savings Account (HSA) that insures you just for the essentials, or if you simply take comfort in the freedom to spend your own money for a policy that covers the newest drugs and diagnostic tests — you may be shocked to learn that you could lose all of those good things under the rules proposed in the two bills that herald a health-care revolution.

In short, the Obama platform would mandate extremely full, expensive, and highly subsidized coverage — including a lot of benefits people would never pay for with their own money — but deliver it through a highly restrictive, HMO-style plan that will determine what care and tests you can and can’t have. It’s a revolution, all right, but in the wrong direction.

Let’s explore the five freedoms that Americans would lose under Obamacare:

1. Freedom to choose what’s in your plan

The bills in both houses require that Americans purchase insurance through “qualified” plans offered by health-care “exchanges” that would be set up in each state. The rub is that the plans can’t really compete based on what they offer. The reason: The federal government will impose a minimum list of benefits that each plan is required to offer.

Today, many states require these “standard benefits packages” — and they’re a major cause for the rise in health-care costs. Every group, from chiropractors to alcohol-abuse counselors, do lobbying to get included. Connecticut, for example, requires reimbursement for hair transplants, hearing aids, and in vitro fertilization.

The Senate bill would require coverage for prescription drugs, mental-health benefits, and substance-abuse services. It also requires policies to insure “children” until the age of 26. That’s just the starting list. The bills would allow the Department of Health and Human Services to add to the list of required benefits, based on recommendations from a committee of experts. Americans, therefore, wouldn’t even know what’s in their plans and what they’re required to pay for, directly or indirectly, until after the bills become law.

2. Freedom to be rewarded for healthy living, or pay your real costs

As with the previous example, the Obama plan enshrines into federal law one of the worst features of state legislation: community rating. Eleven states, ranging from New York to Oregon, have some form of community rating. In its purest form, community rating requires that all patients pay the same rates for their level of coverage regardless of their age or medical condition.

Americans with pre-existing conditions need subsidies under any plan, but community rating is a dubious way to bring fairness to health care. The reason is twofold: First, it forces young people, who typically have lower incomes than older workers, to pay far more than their actual cost, and gives older workers, who can afford to pay more, a big discount. The state laws gouging the young are a major reason so many of them have joined the ranks of uninsured.

Under the Senate plan, insurers would be barred from charging any more than twice as much for one patient vs. any other patient with the same coverage. So if a 20-year-old who costs just $800 a year to insure is forced to pay $2,500, a 62-year-old who costs $7,500 would pay no more than $5,000.

Second, the bills would ban insurers from charging differing premiums based on the health of their customers. Again, that’s understandable for folks with diabetes or cancer. But the bills would bar rewarding people who pursue a healthy lifestyle of exercise or a cholesterol-conscious diet. That’s hardly a formula for lower costs. It’s as if car insurers had to charge the same rates to safe drivers as to chronic speeders with a history of accidents.

3. Freedom to choose high-deductible coverage

The bills threaten to eliminate the one part of the market truly driven by consumers spending their own money. That’s what makes a market, and health care needs more of it, not less.

Hundreds of companies now offer Health Savings Accounts to about 5 million employees. Those workers deposit tax-free money in the accounts and get a matching contribution from their employer. They can use the funds to buy a high-deductible plan — say for major medical costs over $12,000. Preventive care is reimbursed, but patients pay all other routine doctor visits and tests with their own money from the HSA account. As a result, HSA users are far more cost-conscious than customers who are reimbursed for the majority of their care.

The bills seriously endanger the trend toward consumer-driven care in general. By requiring minimum packages, they would prevent patients from choosing stripped-down plans that cover only major medical expenses. “The government could set extremely low deductibles that would eliminate HSAs,” says John Goodman of the National Center for Policy Analysis, a free-market research group. “And they could do it after the bills are passed.”

4. Freedom to keep your existing plan

This is the freedom that the President keeps emphasizing. Yet the bills appear to say otherwise. It’s worth diving into the weeds — the territory where most pundits and politicians don’t seem to have ventured.

The legislation divides the insured into two main groups, and those two groups are treated differently with respect to their current plans. The first are employees covered by the Employee Retirement Security Act of 1974. ERISA regulates companies that are self-insured, meaning they pay claims out of their cash flow, and don’t have real insurance. Those are the GEs (GE, Fortune 500) and Time Warners (TWX, Fortune 500) and most other big companies.

The House bill states that employees covered by ERISA plans are “grandfathered.” Under ERISA, the plans can do pretty much what they want — they’re exempt from standard packages and community rating and can reward employees for healthy lifestyles even in restrictive states.

But read on.

The bill gives ERISA employers a five-year grace period when they can keep offering plans free from the restrictions of the “qualified” policies offered on the exchanges. But after five years, they would have to offer only approved plans, with the myriad rules we’ve already discussed. So for Americans in large corporations, “keeping your own plan” has a strict deadline. In five years, like it or not, you’ll get dumped into the exchange. As we’ll see, it could happen a lot earlier.

The outlook is worse for the second group. It encompasses employees who aren’t under ERISA but get actual insurance either on their own or through small businesses. After the legislation passes, all insurers that offer a wide range of plans to these employees will be forced to offer only “qualified” plans to new customers, via the exchanges.

The employees who got their coverage before the law goes into effect can keep their plans, but once again, there’s a catch. If the plan changes in any way — by altering co-pays, deductibles, or even switching coverage for this or that drug — the employee must drop out and shop through the exchange. Since these plans generally change their policies every year, it’s likely that millions of employees will lose their plans in 12 months.

5. Freedom to choose your doctors

The Senate bill requires that Americans buying through the exchanges — and as we’ve seen, that will soon be most Americans — must get their care through something called “medical home.” Medical home is similar to an HMO. You’re assigned a primary care doctor, and the doctor controls your access to specialists. The primary care physicians will decide which services, like MRIs and other diagnostic scans, are best for you, and will decide when you really need to see a cardiologists or orthopedists.

Under the proposals, the gatekeepers would theoretically guide patients to tests and treatments that have proved most cost-effective. The danger is that doctors will be financially rewarded for denying care, as were HMO physicians more than a decade ago. It was consumer outrage over despotic gatekeepers that made the HMOs so unpopular, and killed what was billed as the solution to America’s health-care cost explosion.

The bills do not specifically rule out fee-for-service plans as options to be offered through the exchanges. But remember, those plans — if they exist — would be barred from charging sick or elderly patients more than young and healthy ones. So patients would be inclined to game the system, staying in the HMO while they’re healthy and switching to fee-for-service when they become seriously ill. “That would kill fee-for-service in a hurry,” says Goodman.

In reality, the flexible, employer-based plans that now dominate the landscape, and that Americans so cherish, could disappear far faster than the 5 year “grace period” that’s barely being discussed.

Companies would have the option of paying an 8% payroll tax into a fund that pays for coverage for Americans who aren’t covered by their employers. It won’t happen right away — large companies must wait a couple of years before they opt out. But it will happen, since it’s likely that the tax will rise a lot more slowly than corporate health-care costs, especially since they’ll be lobbying Washington to keep the tax under control in the righteous name of job creation.

The best solution is to move to a let-freedom-ring regime of high deductibles, no community rating, no standard benefits, and cross-state shopping for bargains (another market-based reform that’s strictly taboo in the bills). I’ll propose my own solution in another piece soon on Fortune.com. For now, we suffer with a flawed health-care system, but we still have our Five Freedoms. Call them the Five Endangered Freedoms.

The NHS has become the unexpected target of those opposed to Barack Obama’s healthcare reform proposals. Republicans and rightwing commentators in the US have made strong allegations about the failings of Britain’s health system. Denis Campbell and Girish Gupta put those claims to professionals in the health sector

Ted Kennedy, 77, would not be treated for his brain tumour if he was in Britain because he is too old – Charles Grassley, Republican senator from Iowa.

The response

Untrue, says the Department of Health. “There is no ban on anyone of any age receiving any treatment, ” said a spokesman. “Whether to prescribe drugs or recommend surgery is rightly a clinical decision taken on a case by case basis.”

The claim

Government health officials in England have decided that $22,750 (£14,000) is what six months’ life is worth. Under their socialised system, if a medical treatment costs more, you’re out of luck – Club for Growth

The response

The National Institute of Health and Clinical Excellence (Nice) decides whether new drugs represent value for money for the NHS in England and Wales.

It replied:

“This is a gross misrepresentation of how Nice applies health economics to try and address the central issue: how to allocate healthcare rationally within the context of limited healthcare resources. Nice assesses the cost of a treatment in terms of a cost-utility analysis which takes account of the quality adjusted life year – the amount and quality of extended life it is hoped the patient will gain. The current ceiling is £30,000 but exceptions are made.”

The claim

In England, anyone over 59 years of age cannot receive heart repairs, stents or bypass because it is not covered as being too expensive and not needed – an anonymously authored, but widely circulated, email, largely sent to older voters

The response

Totally untrue. Growing numbers of patients over 65 with heart conditions are having surgery, including valve repairs and heart bypass surgery, says Professor Peter Weissberg, the British Heart Foundation’s (BHF) medical director. For example, the average age at which people have a bypass operation has risen from 58 in 1991 to 66 in 2008.

The claim

Breast cancer kills 46% of its targets in Britain, compared with 25% in the US; prostate cancer kills 57% of the Britons it strikes, compared with 25% of American victims; Britain’s heart attack fatality rate was 19.5% higher than America’s in 2005 – Pacific Research Institute, a San Francisco-based thinktank

The response

Breast cancer does claim more lives, proportionally, here than in the US. According to the 2002 Globocan database run by the World Health Organisation’s cancer advisers, 19.2 of every 100,000 Americans die of the disease, but 24.3 per 100,000 here die. On prostate cancer, a Lancet Oncology global study last year found that 91.9% of Americans with the disease were still alive after five years compared to just 51.1% in the UK. With heart attacks, 40% of Britons who suffer one die from it compared to 38% in the States – nowhere near the difference claimed.

The claim

In Britain, 40% of cancer patients are never able to see an oncologist; there is explicit rationing for services such as kidney dialysis, open heart surgery and care for the terminally ill – Conservatives for Patients’ Rights

The response

“The claim that 40% of cancer patients are never able to see an oncologist comes from a 15-year-old study which is completely out of date. Since then we have had the Nice Improving Outcomes Guidance series and the NHS Cancer Plan for England, which has increased the number of cancer consultants and established specialist multidisciplinary teams,” said Duleep Allirajah of Macmillan Cancer Support. However, “some people with serious kidney failure are unable to obtain dialysis on the NHS and die”, said Tim Statham, chief executive of the National Kidney Federation. “Some parts of the NHS can’t cope, because patient numbers are increasing by 6% a year, which is a huge burden. Of about 100 renal units in the UK, probably 20% are working at 100% capacity or above,” he added.

The claim about open heart surgery is not true, said the BHF’s Weissberg. “There’s no explicit rationing. Some people don’t get treatment, but those decisions are made solely on the basis of clinical criteria and their risk of dying. We only operate on people who are likely to benefit and not die.” The three main political parties agree that Britain provides good quality end-of-life care but that access to it can be patchy, depending on location and the patient’s condition. The government is working to improve the situation.

The claim

In the UK, breast cancer survival rates are 11% lower than they are here in the United States – Sue Myrick, a Republican congresswoman from North Carolina

The response

If anything the gap is wider than Myrick says. Breakthrough Breast Cancer cite two recent studies from Lancet Oncology. One says that 83.9% of women in the US diagnosed with breast cancer between 1990-94 lived for at least five years compared to 69.7% in the UK – a 14.2% difference. The second showed that, among women diagnosed with the disease in 2000-02, 90.1% in the States survived for at least five years whereas in England it was 77.8% – a 12.3% gap.

The claim

The British healthcare system is infamous for denying state-of-the-art drugs to cancer patients – National Center for Policy Analysis

The response

Nice has recently reformed its procedures after a series of controversies over the unavailability of certain cancer treatments. “The vast majority of new cancer drugs are made available to patients with notable exceptions, such as the likely rejection of several new kidney cancer drugs,” said Allirajah of Macmillan Cancer Support. “However, the Nice process does need reforming to ensure decisions are made more quickly and patients’ quality of life is taken more into account.”

The claim

The British NHS “does not allow” women under 25 to receive screening for cervical cancer – Jim DeMint, Republican senator from South Carolina

The response

The NHS invites women in Wales, Scotland and Northern Ireland to attend for cervical cancer screening from 20 upwards. But in England screening for the disease starts at 25. That policy was recently reviewed and remains unchanged.